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After The Budget Deal, A Few Tidbits For Business?

June 01, 1997

Washington Outlook

AFTER THE BUDGET DEAL, A FEW TIDBITS FOR BUSINESS?

Now that President Clinton and GOP leaders of Congress have struck a balanced-budget deal, the business community is wondering: Is this it for bipartisan cooperation? The cynics assume the Democrats and Republicans will call it quits and gear up for the '98 election battle. But there may be just enough glow left from the budget accord to get a modest business-friendly agenda through the 105th Congress.

Lobbyists believe prospects have brightened for passage of some items on business' wish list. While companies can count on Republicans to champion their agenda, a few corporate priorities have some Democratic support. These include limiting damages stemming from cleaning up toxic-waste sites, deregulating the electric utility industry, and letting banks, securities firms, and insurance companies get into each other's business. Once the budget deal is enacted, "people will get excited and try to find other things to do together," says Mark Isakowitz of the National Federation of Independent Business.

But the era of good feelings will only go so far. Other business favorites enjoy GOP backing but face tough sledding. For example, congressional Democrats, egged on by trial lawyers and labor, will resist bills to curb frivolous lawsuits over defective products and to give companies greater flexibility to offer workers time off instead of overtime pay.

"FRAGILE." At the White House, the President is walking a fine line. To keep the bipartisanship perking, he's working with Republicans on expansion of free trade and a revised environmental-cleanup bill. And on May 21, Treasury Secretary Robert E. Rubin unveiled an Administration plan to spur competition in financial services.

But Clinton can't go too far. Labor for now has slammed the door on White House feelers to work out a compromise on comp time (page 36). Efforts by Clinton economic aides to negotiate with the GOP on a product-liability reform bill are drawing fire from political staffers. And with the budget battle over, Clinton is likely to anger Republicans and business by returning to his social investment initiatives--on early childhood education, the environment, health care, and day care. "After the budget, the test for both parties is, which one does the best job of defining the country's future," says National Economic Council Director Gene Sperling.

That struggle may begin during the process of enacting the tax and spending details of the budget deal. Democratic tempers will flare if Republicans try to kill funding for the National Endowment for the Arts, fatten tax cuts for investors and business, or monkey with Clinton's cherished education tax credits. "The spirit of bipartisan cooperation is fragile," cautions Representative Robert T. Matsui (D-Calif.). Adds a top House GOP aide: "There's still enormous mistrust of the President among our guys."

Even if the two parties sidestep budget differences, they have no intention of tackling other big, politically charged issues before the congressional elections. Convinced they overreached in the revolution-minded 104th Congress, Senate Majority Leader Trent Lott (R-Miss.) and House Speaker Newt Gingrich (R-Ga.) are pushing pragmatism. So they've shelved for now such GOP goals as a sweeping revision of the tax code, major overhauls of Medicare and Social Security, and an end to affirmative action. "Maybe we take half a loaf this year and half a loaf" in 1999, says Assistant Senate Majority Leader Don Nickles (R-Okla.).

The upshot: Business will have to settle for small victories on environmental cleanup, highway funding, and trade. They may lack the sweep of a budget accord, but that's probably the best business can expect divided government to deliver.EDITED BY OWEN ULLMANN By Amy Borrus and Mike McNameeReturn to top